| Stock Splits ... and then what? |
I was wondering what'd happen to a stock price when it splits and whether the price would go up or down or ...
>If it split 2-for-1 I'd say the price gets cut in half. Am I right?
No, I don't mean that. I mean, would you expect the return to be larger or smaller or maybe even random.
>I'd say random. Am I right?
I have no idea, but there seems to be some who expect the return to be larger after a stock split.
>And you decided to check it out, right?
Yes ... and I got these examples where the right chart is a closeup from 20 days before to 20 days after the split:
Microsoft
>I recognize the first guy, but what are the others?
I just searched for stocks that split and found a few ... just to see what happened at the time of the stock split.
>And your conclusion is ... what?
I have no idea. I'm still thinking ...
>If I look at the left chart I'd think that the stock goes up ... eventually.
And if I look at the right chart it seems to go down, in the short term.
>But don't they announce the split, weeks before it happens?
Yes, I guess. Sometimes a month before, sometimes several months.
>And wouldn't that affect the stock price ... at the time they announce the split?
I have no idea.
>Is that all you can say?
I have no idea, but Shell Canada had a stock split in June, 2005:
Shell Canada
But when they announced the split ... that was in March, 2005:
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More recently, Whole Foods announced a split:
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Then there's Aqua America
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and StanCorp Financial
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>So the price drops when the announcement is made ... sometimes, right?
Sometimes.
